Best Technical Trades
Paul Ciana, CMT MLPF&S paul.ciana@baml.com
Technical trends for Trump ¢ Bullish USD: Breadth and technicals favor USD. Overall they point to a stronger US dollar in 2017. We are bullish USD/JPY.
¢ Higher yields: US 10y and 30y yield made large wedge bottom patterns, pointing to a 61.8% Fibonacci retracement of 2.98% and 3.80%, respectively.
e Werecommend buying a NZD/USD 5m .69/.66 put spread 1x1.5 for 43 USD pips (off of .7100 spot).
USD rally is turning Into an outright bull
The Bloomberg US dollar index is approaching all-time highs. The number of USD crosses above their 200-day moving average has broken out higher. The number of USD crosses reaching overbought on RSI (bullish momentum) continues to rise. The USD cumulative advance-decline line recently signaled for tactical USD strength and would turn outright bullish with a trend line break and new index highs.
Chart 79: Bloomberg US dollar index, weekly chart with USD breadth measures
MEBDXY Index - Last Price MISMAVG (200) on Close (BBDXY) LI9L47 Resistance: 1255 | A af" — ql angel wg my 1150
BUSD Cumulative AD Line +23.00 [2 |
-i= ——— Progresshe AD Line pees nearing breakout
. Or. ; pel _—
Me of USD crosses > 200d SMA +100
Breakout
Be of USD crosses RSI>70 a0
ig eg Rising bullish momentum iF
10 ro 2013 2014 2015 2016 2017 Source: BofA Merrill Lynch Global Research, Bloomberg Bankof America Global Rates, FX & EM 2017 Year Ahead | 16 November 2016 47
Merrill Lynch
HOUSE_OVERSIGHT_014777